KOSPI Unlikely To Hold Gains

(RTTNews) - The South Korean stock market on Monday snapped the five-day losing streak that had cost the market more than 75 points or 5 percent while sinking to a 16-month closing low. Now the KOSPI is tipped to head right back to the downside on Tuesday, likely handing back the support at 1,500 points that it had gained a day earlier.

The global forecast is not encouraging, with more troubles from the U.S. financial sector rekindling persistent concerns about the health of the world's largest economy. Financials are expected to come under pressure throughout the region, leading the markets lower. Wall Street also finished sharply lower, adding to the negative sentiment.

The KOSPI finished slightly higher on Monday after larger gains earlier in the session were erased as investors elected to lock in profits. The telecom sector still managed to post significant gains, while the automobile and airline stocks also were up.

For the day, the index added 5.20 points or 0.35 percent to close at 1,502.11 after trading between 1,496.63 and 1,510.98. Volume was 194 million shares worth 2.8 trillion won. There were 425 decliners and 360 gainers, with 99 stocks finishing unchanged.

Among the gainers, Kookmin Bank closed up 2.5 percent, while Shinhan Financial Group gained 2.2 percent, SK Telecom was 2.85 percent higher, KTF added 2.05 percent, Hyundai Motor climbed 3.61 percent, Kia Motors rose 3.46 percent, Samsung Engineering closed up 3.8 percent, Korea Air Line rose 1.22 percent and Asiana Airlines was up 1.34 percent. Finishing lower, GS Holdings tumbled 4.32 percent and STX Corporation lost 4.88 percent.

The market draws a distinctly negative lead from Wall Street as stocks ended Monday's session with substantial declines after investors locked in profits from the standout performance seen in the previous session. Weakness in financials as well as a lackluster housing report gave investors little reason to buy into the markets.

Financial stocks saw significant weakness throughout the session after a Credit Suisse analyst cut his price target on AIG (AIG | Quote | Chart | News | PowerRating) due to the deteriorating credit markets. Lehman Brothers (LEH | Quote | Chart | News | PowerRating) added to the selling pressure following a Financial Times report that said South Korea's financial regulator warned Korean Development Bank to be cautious in buying an overseas bank after the company expressed interest Lehman. Elsewhere, Columbian Bank and Trust Co. of Topeka, Kansas was closed by U.S. regulators over the weekend, making it the ninth bank to collapse in the past year.

Meanwhile, a report form the National Association of Realtors gave investors little reason to buy into the stock markets even though the report showed existing home sales increased by more than expected. Existing home sales rose by 3.1 percent to 5.00 million in July from a downwardly revised level of 4.85 million in June. Economists had expected existing home sales to increase to 4.90 million from the 4.86 million originally reported for the previous month.

In merger and acquisition news, Texas-based petroleum exploration company Grey Wolf (GW | Quote | Chart | News | PowerRating) said that it has agreed to be acquired by Canadian drilling company Precision Drilling Trust (PDS | Quote | Chart | News | PowerRating). The transaction will establish Precision as one of the largest land drillers in North America with a combined fleet of 371 drilling rigs. On a pro-forma basis for the 12 months ended June 30, 2008, combined revenue was $1.8 billion.

The major averages saw further selling pressure in the final hour of the session, ending the day just off of their worst levels of the day. The Dow closed down 241.81 points or 2.1 percent at 11,386.25, the Nasdaq closed down 49.12 points or 2 percent at 2,365.59 and the S&P 500 closed down 25.36 points or 2 percent at 1,266.84.

In economic news, Vietnam is the 10th biggest export market of South Korea, the Korea Trade Investment Promotion Agency said recently. Through the first half of 2008, South Korea's export turnover was up an annual 78 percent to $4.5 billion, the data showed. Petroleum products accounted for 30 percent of the exports worth $1.4 billion, while automobile exports were 8.4 percent at $380 million. Textile and steel plate exports counted 6 percent apiece. Also, South Korea imported $1 billion in goods from Vietnam, marking a trade surplus of $3.5 billion with Vietnam.

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